UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
---------
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2006
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 000-30603
HIV-VAC INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 86-0876846
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
14 LAUREL BLVD COLLINGWOOD, ONTARIO, CANADA L9Y 5A8
(ADDRESS OF PRINCIPAL ADMINISTRATIVE OFFICES)
(705) 446 7242
(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934:
COMMON STOCK ($.001 PAR VALUE)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [x]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act
Yes [ ] No [x]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.406
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes [ ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [x]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter, was $10,430,651.
The issuer has two classes of stock with 10,430,652 common shares and 300,000
preferred "B" outstanding as of September 30, 2011.
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business....................................................... 3
Item 1A. Risk Factors................................................... 9
Item 1B. Unresolved Staff Comments...................................... 9
Item 2. Properties..................................................... 9
Item 3. Legal Proceedings.............................................. 9
Item 4. (Removed and Reserved)......................................... 9
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters and Issuer Purchases of Equity Securities............. 10
Item 6. Selected Financial Data........................................ 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data.................... F-1
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................ 14
Item 9A. Controls and Procedures........................................ 14
Item 9B. Other Information.............................................. 14
PART III
Item 10. Directors, Executive Officers and Corporate Goverance.......... 15
Item 11. Executive Compensation......................................... 16
Item 12. Security Ownership of Certain Beneficial Owners and
Management And Related Stockholder Matters.................... 17
Item 13. Certain Relationships and Related Transactions and
Director Independence......................................... 17
Item 14. Principal Accounting Fees and Services......................... 18
PART IV
Item 15. Exhibits, Financial Statement Schedules........................ 18
Item 14. Disclosure Controls and Procedure.............................. 19
SIGNATURES................................................................ 20
2
Item 1. Business.
We were originally incorporated in Nevada in 1997. We were formerly
known as Persona Records Inc, ("Persona") a corporation involved in the
marketing and development of music recordings. In November 1998, we merged with
Nouveaux Corporation with Persona as the surviving corporation. We changed our
name to HIV-VAC Inc, in March 1999. We changed our name to Grupo International
Inc in September 2010
Our business is the development and marketing of a proposed vaccine
designed to combat HIV/AIDS. This proposed vaccine, which is called NFU.Ac.HIV,
was developed by Dr. Gordon Skinner, our director of research, through the
University of Birmingham, in the U.K. The proposed vaccine was licensed to
Intracell Vaccines Limited from the University of Birmingham in November of
1998, and Intracell in turn entered into an assignment of the license agreement
with us in April of 1999. In addition to his position as our Chairman and
President, Kevin Murray is the managing Director of Intracell Vaccines Limited.
Further, our Director of Research, Dr. Gordon Skinner is a Director of
Intracell. Dr. Skinner, Kevin Murray and John Palethorpe, our Vice President,
each own 33.33% of the outstanding shares of the common stock of Intracell at
September 30, 2006. Intracell owned 6,683,244 or 67.97% of the outstanding
shares of our outstanding common stock and 10,000 or 100% of our outstanding
Series A preferred stock. See security ownership of Certain Beneficial Owners
and Management.
The proposed vaccine was developed in Birmingham, UK, by Dr. Skinner.
The approach was based on twenty years experience of similar intracellular
vaccines, one of which has shown to modulate the pattern of herpes genitalis in
a multi center, placebo controlled trial in the United States and has been used
prophylactically and therapeutically on a named patient basis for two decades in
the UK.
By 1993, the underlying concept for the vaccine had been examined for
feasibility of preparation of the proposed vaccine under the guidance of Dr.
Skinner. The first experimental preparation was made using a B subtype of the
isolate HIV-1 or GB8 virus strain grown in a leukaemic T-lymphocyte cell line
from a young male known as JM cells and was manufactured at the Centre for
Applied Microbiological Research (CAMR), in Porton Down, UK. The proposed
vaccine was tested for antigenic content (protein on the surface of a cell or
bacterium that stimulates the production of antibody) at CAMR and for antigenic
content and immunogenicity (production of an immune response) in laboratories at
the Department of Infection, University of Birmingham. This work was financially
supported by the Vaccine Research Trust, a Charitable Trust registered in the UK
and chaired by Dr. Skinner. This led to the publication of a scientific paper
entitled "Early Studies on a andidate Intracellular Subunit Vaccine
NFU.AcHIV[JM] for prevention and/or modification of HIV related disease," in the
Journal Intervirolgy 1994;37:259-268.
Between 1993 and 1999 the proposed vaccine was the subject of a
research contract between Dr. Skinner, at the time a senior lecturer at the
University of Birmingham, and the Russian Federal AIDS center, Moscow, Russia.
The proposed vaccine underwent initial tests to establish optimum conditions of
preparation, antigenicity and immunogenicity in Russia, with additional tests
for antigenicity being carried out in the UK. The proposed vaccine remained the
property of the University of Birmingham during this time.
Preclinical trials were undertaken at the Russian Federal AIDS center,
Moscow, Russia during the period June 2000 through December 2001. The trials
were undertaken in small animals. Data from the trials indicate that the vaccine
appears to be safe. The vaccine was also shown to illicit an immune response in
small animals.
We have been unable to secure funding for a phase one humans trial.
This trial is estimated to require $6 million to 7 million to complete and is
required to demonstrate the safety of the vaccine through the vaccination of
approximately 20 healthy individuals. To date, we have had very limited success
in raising funds, and if we are unable to raise this amount, we will most likely
cease all activity related to our vaccine development and marketing.
Functions of a Vaccine.
----------------------
A vaccine is part of a process that stimulates the body to mount an
immune response to a harmless version of a micro-organism, or part of a
micro-organism, and from this to construct a type of immune memory which would
allow the immune system to mount a rapid response when and if the body is
invaded by a potent version of a micro-organism. This response, ideally, is
sufficiently rapid so that the micro-organism is not able to replicate to any
great extent before it is eliminated, and thus the individual vaccinated is
protected from disease. The immune memory induced by vaccination is usually
long-lived, and creates antibodies that neutralize invading micro-organisms, by
3
binding to them and preventing them from infecting cells, and lymphocytes, which
recognize cells infected by micro-organisms (ones the antibodies did not
destroy) and destroys them before other cells can be infected. A vaccine can
also be therapeutic because it can stimulate both the humoral and cell mediated
immunity over and above the existing immune status of a person and this is
particularly important in patients who are HIV positive because it is clearly
essential to initiate therapeutic strategy while there is residual functioning
of immune competence in these individuals. This is presently unproven but a
placebo controlled multicentre trial in the United States to look at the
therapeutic value of the herpes vaccine developed by Dr. Skinner has shown that
vaccination of patients who already had the infection modified the pattern of
genital herpes resulting in reduction in the number and severity of recurrences.
The HIV/AIDS Disease.
--------------------
HIV/AIDS is a disease that has the effect of hindering the body's
immune response system, allowing for opportunistic infections and diseases, such
as tuberculosis, to overwhelm the body's immune response to disease. It does
this by infecting and killing the T-lymphocytes of the immune system, which is
consequently unable to deal with other infections, or proliferating cancer
cells. There are two variants of the disease, known as HIV-1 and HIV-2, which
share certain structural similarities, but differ greatly in certain types of
proteins that produce the effects of AIDS. HIV-1 has a shorter time between
infection and the onset of the symptoms of AIDS, and is more easily transmitted.
Transmission can occur through sexual contact, maternal transmission to infants
either in utero or through breastfeeding, or from receiving blood transfusion
from, or sharing hypodermic needles with, infected persons.
The HIV-1 virus particle has an outer envelope, which is studded with
projections of clusters of glycoprotein molecules, surrounding a dense conical
core containing the genomic material. Once received into the bloodstream (by any
of the means described above, for example), the virus essentially "docks" with a
lymphocyte cell and injects its viral core into the cell. The virus, in effect,
hijacks the cell's metabolism, using it to replicate itself so that thousands of
new particles are released into the bloodstream, and the cell dies. These
particles go on to infect other cells, in a kind of chain reaction. Cells can
also be infected by contact with infected cells, owing to certain proteins
transmitted by contact. Some virus particles can become trapped in the lymph
nodes, where they can remain for long periods and infect other cells.
Eventually, so many lymphocyte cells are infected and destroyed that the body's
immune system collapses.
The HIV-1 virus is variable, in that there are two known strains, and
numerous subtypes (10 of which have been identified to date), each of which is
believed to have developed in a certain part of the world. Each of these
subtypes is generally associated with a certain type of transmission, such as
drug abuse, or sexual transmission. The subtypes differ by slight variations in
the glycoproteins, which mean that any effective vaccine will have to deal with
all of these variations.
It is estimated by the National Institute of Allergy and Infectious
Diseases (NIAID) (a division of the US Department of Health and Human Services),
in its July 2004 Report on HIV/AIDS Statistics that, as of December 2003, more
than 20 million people had died since the beginning of the epidemic and that
37.8 million people were living with HIV/AIDS. In addition, the NIAID estimated
that in sub-Saharan Africa alone, 25 million people were infected with the HIV
virus. It is estimated that between 850,000 and 950,000 US residents are
infected with the HIV/AIDS virus. Due to all of these factors, HIV-1 has been
the principal focus of vaccine development and drug treatment.
Governmental Regulation of Vaccines.
-----------------------------------
Our proposed vaccine is subject to regulation by all countries. In the
United States, the vaccine is regulated by the federal government, principally
through the Food and Drug Administration under various federal laws. Regulations
promulgated by various federal, state and local governments govern or influence
the testing, manufacture, safety and efficacy requirements, labeling, storage,
record keeping, licensing, advertising, promotion, distribution and export of
our products. In general, similar regulations are found in all countries
throughout the world, though we may have to demonstrate different levels of
efficacy, depending on the regulatory requirements in each nation.
4
Before we can market our proposed vaccine in the United States, since
it is a biological drug product, we must take numerous steps, which include:
- pre-clinical laboratory and animal testing, to evaluate product
chemistry, formulation and stability, as well as the potential safety, purity
and potency of the proposed vaccine;
- submission to the FDA of an Investigational New Drug Application, which
includes the results of the pre-clinical laboratory and animal testing, and
which must become effective before clinical trials may commence;
- the conduct of well-controlled clinical trials, conducted in accordance
with FDA protocols (including review by an institutional review board) to
adequately establish the safety, potency and purity of the biological drug
product (i.e., our proposed vaccine), and trials to characterize how it behaves
in the human body;
- submission to the FDA of a biologics license application, and the FDA
review of same;
- completion of an FDA pre-approval inspection of the manufacturing
facilities; and
- FDA approval of the license application and all product labeling.
In addition to these steps, we are required to meet with the FDA and
its Vaccines and Related Biological Product Advisory Committee, which is
composed of outside experts who assist the FDA in product reviews, and provide
advice on various issues; in the case of our proposed vaccine, the advice would
typically relate to the clinical development program and clinical study designs
for our proposed vaccine. The recommendations of these committees are not
binding upon the FDA, but are commonly followed by the FDA. The FDA has broad
authority to suspend clinical trials, and all of the FDA's concerns must be
resolved before trials may recommence.
In general, the key element in the process is a demonstration by us
that our proposed vaccine has meaningful efficacy at a statistically significant
level, which means there must be an observed reduction in the incidence of HIV
in the group receiving our proposed vaccine, compared to the control group. As
noted above, the level of efficacy that we must demonstrate may vary from
country to country, depending on the prevailing regulations. Our initial testing
is planned to be performed in Russia and Zambia; there is no guarantee that the
FDA will accept the results of tests completed in these other countries. If the
FDA does not, this could cause substantial delays, by essentially requiring
similar tests in the United States in order to satisfy FDA requirements.
It is also possible that a regulatory agency, in reviewing our proposed
vaccine's efficacy, might only approve the proposed vaccine for certain high
risk populations, thus limiting the market for our proposed vaccine by limiting
the customer base.
Even after approval of the proposed vaccine for use, the manufacture of
our proposed vaccine would be subject to a variety of laws relating to such
matters as safe working conditions, manufacturing practices, environmental
protections, fire hazard control and hazardous substance disposal, which could
incur substantial costs that we cannot predict at this time.
Our proposed vaccine's license would be subject to continual review,
and newly discovered or developed safety or efficacy data could result in
revocation of relevant licenses.
Our Proposed Vaccine.
--------------------
General. Our proposed vaccine is designed to perform two functions. The
first function, which is typical of traditional vaccines, is to develop an
immune response in the vaccinated person in order to prevent HIV from infecting
the human body. The second is to provide therapeutic benefits, like those
described above, to people who are already infected by HIV.
Process of Manufacture. Our proposed vaccine is manufactured by
treating HIV-1 infected lymphocyctic cells with detergent, formaldehyde and
acetone treatments. What are called envelope proteins, [that is, the outer shell
of these cells] are then stripped from the newly formed viruses [within these
infected cells], virus proteins are collected, and the remaining virus
particulates are discarded. The virus proteins are then mixed with proteins
[from other, healthy cells]. This process ensures that the proposed vaccine is
inactivated (that is, the virus is not infective), but that it also contains the
vital HIV-1 glycoproteins, core proteins, regulatory and intermediate proteins
needed to produce the desired effects of the desired immunity and/or therapeutic
effects. Importantly, the method of manufacture allows us to customize a
proposed vaccine to a specific strain, including strains that may evolve over
the next few years.
5
We intend to rely on third parties to manufacture our proposed vaccine,
as we do not have the facilities for the large scale manufacture of the proposed
vaccine. The quality control will be carried out according to guidelines
recommended by the Medicines Control Agency in the UK which includes tests on
the antigenicity and immunogenicity of the preparation and safety testing in
animals.
The proposed vaccine is currently produced at the Russian Federal AIDS
Center. Although the Russian Federal AIDS Center is the only group currently
producing the proposed vaccine, we are not completely dependent upon this group
due to the fact that we feel that our proposed vaccine can be produced elsewhere
for nominal set-up costs.
We believe that our proposed vaccine differs from other vaccines
currently in development, in that it contains a wide spectrum of virus proteins
in their natural configuration with cell proteins, but does not contain virus
particles. By using this intracellular, multi-component approach, we include all
possible protective antigens and possible cross strain protective antigens. The
importance of this is that presentation of virus antigens in association with
cell proteins may preserve the immunogenicity of virus antigens and improve
their protective potential.
The manufacturing process allows slotting in of any virus strain
including new wild type virus strain or recombinant virus strain to the
preparative process. This will exclude a prolonged dead time which would be
inevitable in preparation of vaccines by more molecular methods to accommodate
new virus strains. This approach has been successfully used for many years to
manufacture the influenza vaccine where different strains may be involved in
different years.
Trials. Before any vaccine can be introduced into humans, it must be
rigorously tested under scientific conditions, in order to prove its
effectiveness and safety. This must be done before a country will allow a
vaccine to be sold and used.
Our proposed vaccine was first tested for safety, antigenicity and
immunogenicity at four different centers in the U.K., these being: the Centre
for Applied Microbiological Research in Porton Down, Wiltshire; the Medical
Research Council Mill Hill Laboratories, London; St. Bartholomew's Hospital,
London; and the Department of Infection of the University of Birmingham.
Vaccines then go through a three-stage trial process. Phase I tests for
safety and dosage in small groups of subjects. Phase II comprises larger scale
safety testing and, in the case of vaccines, whether they elicit an immune
response. Phase III comprises large scale, placebo controlled, double-blind
tests for efficacy of the preparation in subjects at high risk of infection.
As a standard industry practice, Phases I and II are often combined, or
run concurrently in the testing of vaccines, so that the first stage of tests
becomes a "Phase I/II trial."
We have completed pre-clinical trials in Russia, in conjunction with
The Russia Federal Aids Center, a department of The Central Institute of
Epidemiology, Moscow, Russia.
We intend, subject to financing, to implement a PhaseI/II trial with
the Medical Control Agency in The United Kingdom through the application for a
CTX exemption to commence a Phase I/II trial as soon as funding becomes
available. We plan to apply for a CTX exemption using the Clade B strain of the
virus as soon as funding and vaccine using the local Clade B strain is made
available. The manufacture of the vaccine will be contracted out and we are
currently evaluating various different manufacturers in Russia, Europe and the
United States.
The trials in the United Kingdom would involve three volunteer groups,
running concurrently: a reactogenicity, safety and specific activity trial in a
limited group of healthy volunteers; an evaluation of clinical effect and safety
in a limited group of HIV-infected volunteers; and reactogenicity, safety and
specific activity trial in a limited group of volunteers who have a concurrent
illness or disease, but who are not in serious ill health. There is a specific
process, involving various entry criteria, used to screen volunteers and
determine their suitability for participation in the study. When the pool of
appropriate volunteers is complete, ten volunteers in each group will receive
four immunizations each of the proposed vaccine, at 30-day intervals, and each
volunteer will be followed up for a period of one year, with monitoring for
safety and immunological responses. Procedures exist for allowing volunteers to
voluntarily withdraw from the trail process, or withdraw mandatorily, if there
is a serious adverse effect. Subjects will be replaced until twenty subjects
have completed the trial.
6
We also intend, subject to financing, to institute studies of the
efficacy of the vaccine in non-human primates in parallel or preceding Phase I
trials of the vaccine in human subjects in Moscow, Russia as soon as funding
becomes available. The vaccine for this study will be manufactured in Russia,
under the supervision and quality control of various parties within and without
Russia, including the Russia Federal AIDS Centre in Moscow and laboratories in
Birmingham and London, U.K. We expect the regulatory approval process to take up
to six months to complete.
We also anticipate, subject to financing, to initiating a Phase I/II
trial in Sub-Sahara Africa using the local African HIV sub-type as soon as
funding becomes available. These trials will be done in conjunction with local
Government and would commence after a satisfactory pre-clinical trial has
completed the evaluation of toxicity and immunogenicity of the local strain.
However, we cannot initiate the pre-clinical or Phase I/II trials until such
time as we have raised at least an additional $3 million, which is the amount we
anticipate we will need for these African trials. Furthermore, in addition to
restrictions due to lack of funding, we also need to manufacture a batch of the
vaccine to initiate these trials. We cannot manufacture a batch until we have an
agreement in place with a country in Africa that is prepared to work with us. It
is estimated that these pre-clinical trials would take approximately twelve
months to complete from the time we have an agreement in place. If these trials
take place, we intend to invite the Division of AIDS of National Institute of
Allergy and Infectious Diseases to monitor the African trials.
No trials are currently scheduled to take place in the United States.
However, it is our intention to invite the National Institute of Health (NIH)
through the offices of The Division of AIDS (DIADS) to assist in the planning
and execution of the trials and monitor the trials described above. If the
trials are successful, then we would hope to undertake a Phase I/II trial in the
United States, within two years of successfully completing trials in the UK.
There can be no assurance that we will be able to undertake such a trial in the
United States, nor can the results of the trials in Russia and/or Africa and the
UK be predicted.
Ultimate Market. The proposed vaccine is directed at the prominent
strain found in Russia, certain parts of Europe and the Americas, while the
proposed vaccine we anticipate preparing for Africa would be directed at the
strain prevalent in southern Africa and in India. The ability to
custom-manufacture different proposed vaccines for different strains (see the
caption above: Process of Manufacture) will enhance our ability to address the
worldwide market, by allowing us to design proposed vaccines targeting different
strains of the HIV virus present in different areas of the world.
Marketing. We intend to rely on third parties for the sales and
marketing of our proposed vaccine. To date, we have not entered into any
marketing agreements. We intend to enter into agreements for the marketing and
distribution of our proposed vaccine with partners, once we have established the
effectiveness of the proposed vaccine.
Competition. We estimate that approximately 30 other companies have
been engaged in research to produce an HIV vaccine. To our knowledge, most of
these efforts have not produced a viable vaccine. AIDSVAX, a product produced by
Vaxgen Inc, completed a phase 3 trial in both the United States and Thialand
during 2003, where results showed that the candidate vaccines were ineffective.
ALVAC, a vaccine produced by Adventis began a trial in Thialand in the Fall of
2003 and Merck commenced testing of its adenovirus based candiate in 2005. Non
of these vaccines have proven to be effective. We believe there are other
vaccines that are likely to commence Phase I/II trials during the next two
years..
To our knowledge, our proposed vaccine is the only intracellular
multi-component vaccine in development. It also differs from other vaccines
presently in clinical trial, in that it contains a wide representation of virus
proteins in their natural configuration, but does not contain virus particles.
In addition, our proposed vaccine can be easily adapted to different virus
strains. It is our belief that these factors give our proposed vaccine more
potential for protection, therapy, and safety.
Patent Protection. Under our assignment of license agreement with
Intracell Vaccines Limited, we hold exclusive rights to patents owned by the
University of Birmingham. For a description of our obligations to the University
of Birmingham under our assignment agreement see the caption below License
Agreement and Consulting Agreement. These patents describe a method of
manufacture of a HIV vaccine owned by the University of Birmingham (see the
caption above: Process of Manufacture). We have exclusive rights to use the
patents which are protected in Australia, the Netherlands, Germany, Italy,
France and Great Britain. Patents are pending in Canada and Japan. In addition,
we have the right to use two United States patents owned by the University of
Birmingham. The United States patents relate to a method of manufacture of a
herpes vaccine. We believe that the United States patents cover all similar
methods of manufacture related to the proposed HIV vaccine and will provide
reasonable assistance in enforcing these patents. Because these patents cover
the method of manufacture, we believe that the patents cover all strains of the
HIV virus. The patents expire in 2011.
7
The University of Birmingham also holds patent rights for a herpes
vaccine in numerous other countries. It is our belief, based on the method of
manufacture, that these patents would afford us some protection in certain other
countries, including South Africa, South Korea, Israel, Ireland, and Austria.
These patents expire prior to 2010.
We cancelled our license agreement with the University of Birmingham in
2007, as we did not believe that we would be able to commercialize the vaccine
prior to the expiration of the patents in 2011. We plan to continue research and
development of the vaccine, and believe that it might be possible to establish
new patents, depending on the progress and results of our research.
License Agreement and Consulting Agreement.
------------------------------------------
We entered into a license assignment agreement with Intracell Vaccines
Limited, by agreement dated April 6, 1999. We agreed to assume all of Intracell
Vaccine's obligations under its license agreement with the University of
Birmingham, and issued them 57,529 shares of our common stock, and 10,000 shares
of preferred stock. We also agreed to finance the development of the proposed
vaccine, and entered into an anti-dilution agreement with Intracell Vaccines, so
that Intracell Vaccines and its shareholders would maintain a 60% interest in
our common shares (after allowing for options), up until the time we raise $5
million [in financing]. The shareholders of Intracell Vaccines also received
stock options under the license assignment agreement as follows:
1. Options for 100,000 (post reverse split) shares (exercisable at
$[.001] per share)when initial human trials of the proposed
vaccine begin.
2. Options for 100,000 (post reverse split) shares (exercisable at
$[.001] per share) when a phase III human trial begins.
3. Options for 100,000 (post reverse split) shares (exercisable at
$[.001] per share) when the proposed vaccine receives product
license by a recognized government.
We failed to attract financing as agreed under our agreement with
Intracell Vaccine Ltd, and on August 7, 2001 the Company entered into an
agreement with Intracell, whereby Intracell agreed to waive its right to
terminate the assignment of license agreement provided that the Company issue an
additional 3,000,000 of its common shares to Intracell and 7,500,000 options to
purchase shares of common stock of the Company. Such options shall vest in
blocks of 2,500,000 upon the occurrence of certain events as follows:
1. 2,500,000 options, each option to convert to common shares at an
exercise price of $0.50 (fifty cents) per share when the company
commences a phase I/II trial.
2. 2,500,000 options, each option to convert to common shares at an
exercise price of $1.00 (one dollars) per share when the company
commences a phase III trial.
3. 2,500,000 options, each option to convert to common shares at an
exercise price of $2.00 (one dollars) per share when the company
receives product license from a recognized government.
The license agreement with the University of Birmingham that we
acquired by assignment from Intracell Vaccines Limited provides for the payment
of a minimum royalty to the University of Birmingham of approximately $75,000,
commencing on January 1, 2002. Royalties are paid as follows:
1. 5% of net sales in all countries where patent protection is
provided;
2. 3% of net sales in all countries where there is no patent
protection;
3. 3% of net sales for all countries for a period of 10 years after
the first commercial sale in each country, which no royalty being
payable thereafter.
8
In addition, we, as the licensee, are responsible under the license
agreement for carrying out all clinical trials of the proposed vaccine that may
be required for patent and licensing purposes. We are also responsible for the
maintenance of the patents. In the event we, or the University of Birmingham,
make improvements to the patents, this will result in the extension of the
royalty obligations for the life of the new patent. The agreement can be
terminated if we fail to make the royalty payments within 60 days after notice,
or if we have a receiver appointed for all or any part of our assets.
At year end 30 September 2006, we were in arrears on the payment of
license fees due under the license agreement with The University of Birmingham.
Under the license agreement, in addition to the above payments, we were required
to pay a minimum license fee of approximately $70,000 on January 1, 2002. We did
not make that payment. We were also required to pay an additional $70,000 to The
University of Birmingham for each of the years beginning January 1, 2003,
through January 1, 2006. At September 30, 2006, we owed the University of
Birmingham $468,150.
We cancelled our license agreement with the University of Birmingham in
December 2007, as we did not believe that we would be able to commercialize the
vaccine prior to the expiration of the patents in 2011. We plan to continue
research and development of the vaccine, and believe that it might be possible
to establish new patents, depending on the progress and results of our research.
We also entered into a consulting agreement with Intracell Vaccines
pursuant to which Intracell Vaccines agreed to provide us with research, process
science, clinical and regulatory support, primarily by making the services of
certain Intracell Vaccines personnel available to us. We reimburse Intracell
Vaccines for all of its costs and expenses relating to the provision of these
services. We ceased using Intracell in June 2005. We currently owe Intracell
Vaccines $457,406 in outstanding consulting fees.
Due to our failure to make timely payments under either the license
agreement or consulting agreement, both of these agreements may be terminated at
any time upon receipt of sixty days notice. Although we have not yet received
notice from either The University of Birmingham or Intracell Vaccines, there can
be no assurance that either of these parties will not choose to terminate these
agreements at any time.
Item 1A. Risk Factors
Not applicable to a smaller reporting company.
Item IB. Unresolved Staff Comments
Not applicable.
Item 2. Properties.
Our administration offices are located in Collingwood, Ontario. The
office is provided to us as part of our consulting agreement with Intracell
Vaccines Limited. We lease approximately 400 square feet of laboratory space in
Moseley, Birmingham, United Kingdom under a lease agreement that terminated in
March, 2005. The lease is now on a month to month basis. The laboratory space in
Moseley is used for storage and limited research development of our proposed
vaccine. We do not engage in any aspects of the real estate business.
Item 3. Legal Proceedings.
We are not a party or subject to any legal proceedings the outcome of
which management believes would have a material adverse effect on our financial
condition or results of operations.
Item 4. (Removed and Reserved).
9
PART II
Item 5. Market For Registrant's Common Equity and Related Stockholder Matters.
a) Market Information. Our common shares trade under the symbol "HIVV" in
July 2001. Our common shares ceased trading on the OTCBB on February
19, 2004, because we were unable to maintain our full reporting status
requirements for financial reasons. We continued trading on the Pink
Sheets since February 20, 2004 under the symbol HIVV. We are unable to
retrieve historical data on the trading price of our common stock
between 2003 and 2006, but believe that the stock traded in the range
of $0.01 and $0.05
b) Holders. As of September 30, 2006, there were 324 holders of record
based on the records of our transfer agent. This number does not
include beneficial owners of our common shares, of which we believe
there are a substantial number whose shares are held in the names of
various securities brokers, dealers and registered clearing agencies.
c) Dividends. We have never paid dividends on our common shares and do
not intend to pay dividends on our common shares in the foreseeable
future. Our board of directors intends to retain any future earnings
to provide funds for the operation and expansion of our business. Any
decision as to the future payments of dividends will depend on our
results of operations and financial position and such other factors as
our board of directors, in its discretion, deems relevant.
d) Securities authorized for issuance under equity compensation plans. No
securities are authorized for issuance by the Company under equity
compensation plans.
e) Performance graph. Not applicable.
f) Recent sales of Unregistered Securities.
On September 30, 2005 the Company cancelled 1,016 Common Shares and
700,000 Preferred Shares that werte held as treasury stock.
Item 5(b) Use of Proceeds. Not applicable.
Item 5(c) Purchases of Equity Securities by the issuer and affiliated
purchasers.
Not applicable
Item 6. Selected Financial Data
Not applicable to a smaller reporting company.
Item 7. Management's Discussion And Analysis Financial Condition and Results of
Operations.
The following discussion regarding us and our business and operations contains
forward-looking statements. Such statements consist of any statement other than
a recitation of historical fact, and can be identified by the use of such
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon, or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative, and there are certain risks and uncertainties that
could cause actual events or results to differ materially from those referred to
in such forward-looking statements.
Summary of Significant Accounting Policies
The following accounting policies are considered critical by our management.
Use of estimates:
These and other accounting policies require that estimates be made based on
assumptions and judgment, which affect revenues, expenses, assets, liabilities
and disclosure of contingencies in our financial statements. These estimates and
assumptions are based on historical experience and on various other factors that
are believed to be reasonable under the circumstances. However, actual results
may differ from these estimates under different and/or future circumstances.
10
Impairment of long-lived assets:
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" ("SFAS 144"). Under SFAS 144, impairment
losses on long-lived assets are recognized when events or changes in
circumstances indicate that the undiscounted cash flows estimated to be
generated by such assets are less than their carrying value and, accordingly,
all or a portion of such carrying value may not be recoverable. Impairment
losses are then measured by comparing the fair value of assets to their carrying
amounts.
Net earnings (loss) per share:
The Company presents "basic" earnings (loss) per share and, if applicable,
"diluted" earnings per share pursuant to the provisions of Statement of
Financial Accounting Standards No. 128, "Earnings per Share". Basic earnings
(loss) per share is calculated by dividing net income or loss by the weighted
average number of common shares outstanding during each period. The calculation
of diluted earnings per share is similar to that of basic earnings per share,
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if all potentially dilutive
common shares, such as those issuable upon the exercise of stock options, were
issued during the period.
Foreign currency translation and transactions:
British assets and liabilities are translated at current exchanges rates and
expenses are translated at average exchange rates in effect during each period.
Resulting translation adjustments, if material, would be recorded as a separate
component of stockholders' deficiency. Foreign currency transaction gains and
losses, which have not been material, are included in results of operations as
incurred.
Stock-Based Compensation
We record stock based compensation in accordance with FASB ASC 718, Stock
Compensation. ASC 718 requires that the cost resulting from all share-based
transactions be recorded in the financial statements and establishes fair value
as the measurement objective in accounting for share-based payment arrangements
and requires all entities to apply a fair-value-based measurement in accounting
for share-based payment transactions with employees. The Statement also
establishes fair value as the measurement objective for transactions in which an
entity acquires goods or services from non-employees in share-based payment
transactions.
Recent Pronouncements
We have determined that all recently issued accounting standards will not have a
material impact on our financial statements, or do not apply to our operations.
Our Plan of Operation
We were incorporated in January of 1997, and do not have any significant
operating history or financial results. We have limited vaccine development and
marketing operations, including the pre-clinical testing in Russia of our
proposed vaccine designed to combat HIV/AIDS, building an infrastructure and
updating our research. As a result, for the fiscal year ended September 30, 2006
and the period from January 10, 1997 (date of inception) to 2006 we incurred
approximately $19,546, and $1,752,498 in research and development costs and
$19,200 and $755,627 in general and administrative expenses, respectively. We
incurred a net loss of approximately $143,476 or $(.01) per share based on
9,830,652 weighted average shares outstanding for the fiscal year ended
September 30, 2006 compared to approximately $7,444,161 or $(1.15) per share
based on 6,471,961 weighted average shares outstanding for the period from
January 10, 1997 (date of inception) to September 30, 2006.
We did not conduct any operations of a commercial nature during the period from
January 10, 1997 (date of inception) to September 30, 2006. Through September
30, 2006 we have relied on advances of approximately $536,244 from our principal
stockholders, trade payables of approximately $511,572, proceeds of $1,196,272
from the sale of common stock and the issue of stock for fees and/or services in
the amount of $4,684,900 to support our limited operations. As of September 30,
2006, we had approximately $924 of cash and cash equivalents. We seek additional
equity or debt financing of up to $7 million which we plan to use for HIV-VAC
and to continue implementing pre-clinical and Phase I/II testing of our proposed
vaccine. If we do not get sufficient financing, we will not be able to continue
as a going concern and we may have to terminate our operations and liquidate our
business (see Note 1 to financial statements).
11
Our business plan for the next year, is dependent on raising sufficient funding
to implement a Phase I/II trial in the United Kingdom through the application
for a CTX exemption with the Medical Control agency. We plan to apply for a CTX
exemption using the Clade B strain of the virus. The manufacture of the vaccine
will be contracted out to a manufacturer located in either the UK or the USA.
We also plan, subject to financing, to initiate further trials in Russia, in
conjunction with The Russia Federal Aids Center, a department of The Central
Institute of Epidemiology, Moscow, Russia. using in non-human primates in
parallel or preceding Phase I trials. We expect the regulatory approval process
to take up to twelve months to complete. The proposed primate vaccine will be
manufactured in Russia or the UK, under the supervision and quality control of
various parties, including independent laboratories in London and our laboratory
in Birmingham.
In addition, we anticipate, subject to financing set forth above, to initiate a
Phase I/II trial in Sub-Sahara Africa using the local African HIV sub-type.
These trials will be done in conjunction with local Government and would
commence after a satisfactory pre-clinical trial has completed the evaluation of
toxicity and immunogenicity of the local strain. However, we cannot initiate the
pre-clinical or Phase I/II trials until such time as we have raised at least $9
million, which is the amount we anticipate we will need for these trials.
Furthermore, in addition to restrictions due to lack of funding, we also need to
manufacture a batch of the vaccine to initiate these trials. We cannot
manufacture a batch until we have an agreement in place with a country in Africa
that is prepared to work with us. It is estimated that these pre-clinical trials
would take approximately twelve months to complete once we have an agreement in
place. If these trials take place, we intend to invite the Division of AIDS of
National Institute of Allergy and Infectious Diseases to monitor the African
trials.
No trials are currently scheduled to take place in the United States. However,
it is our intention to invite the National Institute of Health (NIH) through the
offices of The Division of AIDS (DIADS) to assist in the planning and execution
of the trials and monitor the trials described above. There can be no assurance
that the results of the trials in Russia and/or Africa and the UK can be
predicted to be positive.
We estimate that we will require approximately $6 million to $7 million to
conduct our vaccine development activities through to a phase I trial.. This
amount would be used to pay for vaccine manufacture, vaccine trial costs and
testing, equipment and corporate overhead. We are hoping to raise a minimum of
$6 million through one or more private offerings pursuant to Rule 506 or
Regulation D or through an offshore offering pursuant to Regulation S; however,
nothing in this annual report shall constitute an offer of any securities for
sale. Such shares when sold will not have been registered under the Act and may
not be offered or sold in the United States absent registration or an applicable
exemption from registration requirements. To date, we have had very limited
success in raising funds, and if we are unable to raise this amount, we will
most likely cease all activity related to our vaccine development and marketing.
We have to date relied on a small number of investors to provide us with
financing for the commencement of our development program, including Intracell
Vaccines Limited. Amounts owed to these individuals are payable upon demand.
If we proceeded with our vaccine development, we would need to purchase
approximately $500,000 in equipment to be used for research and expanding
testing laboratories. In addition, we would expect to hire an additional fifteen
employees for both research and administrative support over the duration of the
trials..
We are anticipating that the sources of funds for the intended clinical trials
will be the proceeds that we receive from the conversion of the Series B
preferred stock, and possible assistance from Intracell in the form of a loan.
In addition we are looking at other financing methods including finding joint
venture partners who might provide substantial funding to the project or the
granting of sub-licenses on payment of upfront fees and the payment of on-going
royalties on sales. The Company is not currently negotiating with any potential
joint venture partners and there can be no assurance that the Company will enter
into any joint venture agreements. We are also looking at obtaining government
or charitable grants to assist us in our funding.
We are also considering the acquisition of other technologies that might make
financing the Company more viable.
12
Item 8. Financial Statements.
HIV-VAC, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2006 AND 2005
AND FROM INCEPTION (JANUARY 10, 1997)
THROUGH SEPTEMBER 30, 2006
CONTENTS
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets F-2
Statements of Operations and Comprehensive Loss F-3
Statements of Stockholders' Equity (Deficit) F-4 - F-9
Statements of Cash Flows F-10 - F-11
Notes to Financial Statements F-12 - F-21
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders of
HIV-VAC, Inc.
We have audited the accompanying balance sheets of HIV-VAC, Inc. (the
"Company") as at September 30, 2006 and 2005, and the statements of operations
and comprehensive loss, stockholders' equity (deficit), and cash flows for each
of the two years in the period ended September 30, 2006, and cumulative from
inception (January 10, 1997) through to September 30, 2006, except as explained
as follows: we did not audit the cumulative date from January 10, 1997 to
September 30, 2001. The cumulative data was audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to the
amounts in the cumulative data through September 30, 2001, is based solely on
the report of other auditors. The Company's management is responsible for these
financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of HIV-VAC, Inc. as at
September 30, 2006 and 2005 and the results of its operations and its cash flows
for each of the two years in the period ended September 30, 2006 in conformity
with accounting principles generally accepted in the United States.
/s/ SF Partnership, LLP
Toronto, Canada CHARTERED ACCOUNTANTS
July 6, 2011
F-1
HIV-VAC, INC.
(A Development Stage Company)
Balance Sheets
September 30, 2006 and 2005
2006 2005
ASSETS
Current
Cash $ 924 $ 906
Prepaid and sundry assets 21,510 23,950
----------- -----------
Total Current Assets 22,434 24,856
Furniture and Equipment, Net (Note 3) 5,637 6,471
Intangible Asset, Net (Note 4) 69,379 84,795
----------- -----------
Total Assets $ 97,450 $ 116,122
=========== ===========
LIABILITIES AND
STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 511,572 $ 389,886
Accrued liabilities 114,971 80,971
Advances from related parties (Note 5) 536,244 535,044
----------- -----------
Total Liabilities 1,162,787 1,005,901
----------- -----------
Stockholders' Deficit
Preferred stock, $0.01 par value;
10,000,000 shares authorized
Series A, non-preferential;
10,000 issued and outstanding 100 100
Series B, convertible,
non-preferential; 300,000 shares
issued and outstanding 3,000 3,000
Common stock, $0.001 par value;
500,000,000 shares authorized
9,830,652 shares issued and outstanding 9,831 9,831
Additional paid in capital 6,434,160 6,434,160
Deficit accumulated during the
development stage (7,454,161) (7,310,685)
Accumulated other comprehensive loss (58,267) (26,185)
----------- -----------
Total Stockholders' Deficit (1,065,337) (889,779)
----------- -----------
Total Liabilities and Stockholders' Deficit $ 97,450 $ 116,122
=========== ===========
Commitments and Contingencies (Note 7)
(The accompanying notes are an integral part of these financial statements.)
F-2
HIV-VAC, INC.
(A Development Stage Company)
Statements of Operations and Comprehensive Loss
Years Ended September 30, 2006 and 2005 and for the Period
from January 10, 1997 (Inception) to September 30, 2006
Cumulative
from
January 10,
1997
(Inception) to
September 30,
2006 2005 2006
Expenses
Royalty fees $ 88,480 $ 93,955 $ 1,922,343
Research and development costs 19,546 28,665 1,752,498
General and administrative 19,200 18,622 755,627
Depreciation and amortization 16,250 16,379 158,401
Legal fees -- -- 1,500,028
Licensing fees -- -- 635,500
Loss from disposal of assets -- -- 30,195
----------- ----------- -------------
143,476 157,621 6,754,592
----------- ----------- -------------
Loss from Operations (143,476) (157,621) (6,754,592)
----------- ----------- -------------
Other Income (Expense)
Other expenses -- -- (261,162)
Other income -- -- 3,774
----------- ----------- -------------
Total Other Expense -- -- (257,388)
----------- ----------- -------------
Loss from Continuing Operations (143,476) (157,621) (7,011,980)
Loss from Discontinued Operations -- -- (432,181)
----------- ----------- -------------
Net Loss (143,476) (157,621) (7,444,161)
Foreign currency translation
adjustment (32,082) 14,714 (58,267)
----------- ----------- -------------
Comprehensive Loss $ (175,558) $ (142,907) $ (7,502,428)
=========== =========== =============
Weighted average number of
shares outstanding - basic and diluted 9,830,652 9,831,668
=========== ===========
Loss per weighted average number of
shares outstanding - basic and diluted $ (0.01) $ (0.02)
=========== ===========
(The accompanying notes are an integral part of these financial statements.)
F-3
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2006
Preferred Stock
-------------------------------------------------
Series A Series B Common Stock
-------------------- --------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
-------- ---------- ------------ ------------- ----------- -------------
Issuance of shares
to founders -- $ -- -- $ -- 1,016 $ 1
Net loss -- -- -- -- -- --
Merger with
Nouveaux Corporation -- -- -- -- 781 1
Additional investment
by stockholders -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 1998 -- -- -- -- 1,797 2
-------- ---------- ------------ ------------- ----------- -------------
Net loss -- -- -- -- -- --
Issuance of common
stock under 504 offering -- -- -- -- 200,103 200
Issuance of common stock
under 504 offering -- -- -- -- 92,463 92
Officers' compensation
capitalized -- -- -- -- -- --
Issuance of common and
series A preferred stock
for license agreement 10,000 100 -- -- 57,529 57
Purchase of treasury stock -- -- -- -- -- --
Issuance of common stock -- -- -- -- 400 1
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 1999 10,000 100 -- -- 352,292 352
-------- ---------- ------------ ------------- ----------- -------------
Net loss -- -- -- -- -- --
Other comprehensive loss -- -- -- -- -- --
Shares issued - acquisition
of Lifeplan -- -- -- -- 1,001 1
Forgiveness of
stockholder debt -- -- -- -- -- --
Issuance of common stock -- -- -- -- 4,548 4
Shares issued for license -- -- -- -- 31,252 31
Issuance of common stock -- -- -- -- 733 1
Shares issued for services -- -- -- -- 60,031 60
Issuance of common stock -- -- -- -- 4,600 5
Subscription received -- -- -- -- -- --
Issuance of common stock -- -- -- -- 4,600 5
Issuance of common stock -- -- -- -- 6,352 6
Officers' compensation
capitalized -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2000 10,000 $ 100 -- $ -- 465,409 $ 465
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-4
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2006
Deficit
Accumulated Accumulated Total
Additional Other During the Stockholders'
Treasury Paid in Subscription Comprehensive Development Equity
Stock Capital Receivable Income (loss) Stage (Deficit)
-------- ---------- ------------ ------------- ----------- -------------
Issuance of shares
to founders $ -- $ 507 $ -- $ -- $ -- $ 508
Net loss -- -- -- -- (432,181) (432,181)
Merger with
Nouveaux Corporation -- 350,458 -- -- (243,934) 106,525
Additional investment
by stockholders -- 342,108 -- -- -- 342,108
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 1998 -- 693,073 -- -- (676,115) 16,960
-------- ---------- ------------ ------------- ----------- -------------
Net loss -- -- -- -- (212,460) (212,460)
Issuance of common
stock under 504 offering -- 99,800 -- -- -- 100,000
Issuance of common stock
under 504 offering -- 139,908 (140,000) -- -- --
Officers' compensation
capitalized -- 15,000 -- -- -- 15,000
Issuance of common and
series A preferred stock
for license agreement -- 99,843 -- -- -- 100,000
Purchase of treasury stock (1,767) -- -- -- -- (1,767)
Issuance of common stock -- 5,040 -- -- -- 5,041
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 1999 (1,767) 1,052,664 (140,000) -- (888,575) 22,774
-------- ---------- ------------ ------------- ----------- -------------
Net loss -- -- -- -- (2,622,708) (2,622,708)
Other comprehensive loss -- -- -- (9,240) -- (9,240)
Shares issued - acquisition
of Lifeplan -- 9,999 -- -- (17,227) (7,227)
Forgiveness of
stockholder debt -- 7,227 -- -- -- 7,227
Issuance of common stock -- 99,986 -- -- -- 99,990
Shares issued for license -- 635,469 -- -- -- 635,500
Issuance of common stock -- 23,654 -- -- -- 23,655
Shares issued for services -- 1,349,940 -- -- -- 1,350,000
Issuance of common stock -- 99,985 -- -- -- 99,990
Subscription received -- -- 140,000 -- -- 140,000
Issuance of common stock -- 99,985 -- -- -- 99,990
Issuance of common stock -- 99,984 -- -- -- 99,990
Officers' compensation
capitalized -- 25,000 -- -- -- 25,000
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2000 $ (1,767) $3,503,893 $ -- $ (9,240) $(3,528,510) $ (35,059)
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-5
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2006
Preferred Stock
-------------------------------------------------
Series A Series B Common Stock
-------------------- --------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2000 10,000 $ 100 -- $ -- 465,409 $ 465
Net loss -- -- -- -- -- --
Other comprehensive loss -- -- -- -- -- --
Shares issued for services -- -- -- -- 5,003 5
Issuance of common
for license -- -- -- -- 3,000,000 3,000
Issuance of series B
preferred stock -- -- 1,000,000 10,000 -- --
Officers' compensation
capitalized -- -- -- -- -- --
Dividends - preferred
B stock -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2001 10,000 $ 100 1,000,000 $ 10,000 3,470,412 $ 3,470
======== ========== ============ ============= =========== =============
Net loss -- $ -- -- $ -- -- $ --
Other comprehensive loss -- -- -- -- -- --
Purchase of Treasury Stock -- -- -- -- -- --
Officers compensation
capitalized -- -- -- -- -- --
Shares issued for services -- -- -- -- 150,000 150
Shares issued for services -- -- -- -- 200,000 200
Shares issued to directors
and officers -- -- -- -- 300,000 300
Sale of treasury stock -- -- -- -- -- --
Shares issued to officer
for cash -- -- -- -- 100,000 100
Shares issued for debt -- -- -- -- 2,272,727 2,273
Shares issued for debt -- -- -- -- 1,323,529 1,324
Convert Note for Options -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2002 10,000 $ 100 1,000,000 $ 10,000 7,816,668 $ 7,817
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-6
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2006
Deficit
Accumulated Accumulated Total
Additional Other During the Stockholders'
Treasury Paid in Subscription Comprehensive Development Equity
Stock Capital Receivable Income (loss) Stage (Deficit)
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2000 $ (1,767) $3,503,893 $ -- $ (9,240) $(3,528,510) $ (35,059)
Net loss -- -- -- -- (2,015,401) (2,015,401)
Other comprehensive loss -- -- -- 2,030 -- 2,030
Shares issued for services -- 19,995 -- -- -- 20,000
Issuance of common
for license -- 1,497,000 -- -- -- 1,500,000
Issuance of series B
preferred stock -- 10,000 -- -- -- 20,000
Officers' compensation
capitalized -- 40,000 -- -- -- 40,000
Dividends - preferred
B stock -- -- -- -- (10,000) (10,000)
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2001 $ (1,767) $5,070,888 $ -- $ (7,210) $(5,553,911) $ (478,430)
======== ========== ============ ============= =========== =============
Net loss $ -- $ -- $ -- $ -- $ (806,523) $ (806,523)
Other comprehensive loss -- -- -- (1,059) -- (1,059)
Purchase of Treasury Stock (10,000) -- -- -- -- (10,000)
Officers compensation
capitalized -- 20,000 -- -- -- 20,000
Shares issued for services -- 22,350 -- -- -- 22,500
Shares issued for services -- 31,800 -- -- -- 32,000
Shares issued to directors
and officers -- 59,700 -- -- -- 60,000
Sale of treasury stock 3,000 12,000 -- -- -- 15,000
Shares issued to officer
for cash -- 19,900 -- -- -- 20,000
Shares issued for debt -- 497,727 -- -- -- 500,000
Shares issued for debt -- 223,676 -- -- -- 225,000
Convert Note for Options -- 140,000 -- -- -- 140,000
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2002 $ (8,767) $6,098,041 $ -- $ (8,269) $(6,360,434) $ (261,512)
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-7
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2006
Preferred Stock
-------------------------------------------------
Series A Series B Common Stock
-------------------- --------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2002 10,000 $ 100 1,000,000 $ 10,000 7,816,668 $ 7,817
Shares issued to
directors and officers -- -- -- -- 300,000 300
Shares issued for debt -- -- -- -- 1,290,000 1,290
Net loss -- -- -- -- -- --
Other comprehensive loss -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2003 10,000 $ 100 1,000,000 $ 10,000 9,406,668 $ 9,407
======== ========== ============ ============= =========== =============
Net Loss -- $ -- -- $ -- -- $ --
Other comprehensive loss -- -- -- -- -- --
Shares issued for services -- -- -- -- 425,000 425
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2004 10,000 $ 100 1,000,000 $ 10,000 9,831,668 $ 9,832
======== ========== ============ ============= =========== =============
Deficit
Accumulated Accumulated Total
Additional Other During the Stockholders'
Treasury Paid in Subscription Comprehensive Development Equity
Stock Capital Receivable Income (loss) Stage (Deficit)
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2002 $ (8,767) $6,098,041 $ -- $ (8,269) $(6,360,434) $ (261,512)
Shares issued to
directors and officers -- 49,800 -- -- -- 50,100
Shares issued for debt -- 246,010 -- -- -- 247,300
Net loss -- -- -- -- (510,450) (510,450)
Other comprehensive loss -- -- -- (15,222) -- (15,222)
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2003 $ (8,767) $6,393,851 $ -- $ (23,491) $(6,870,884) $ (489,784)
======== ========== ============ ============= =========== =============
Net Loss $ -- $ -- $ -- $ -- $ (282,180) $ (282,180)
Other comprehensive loss -- -- -- (17,408) -- (17,408)
Shares issued for services -- 42,075 -- -- -- 42,500
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2004 $ (8,767) $6,435,926 $ -- $ (40,899) $(7,153,064) $ (746,872)
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-8
HIV-VAC, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Period from January 10, 1997 (Inception) to September 30, 2006
Preferred Stock
-------------------------------------------------
Series A Series B Common Stock
-------------------- --------------------------- --------------------------
Shares Amount Shares Amount Shares Amount
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2004 10,000 $ 100 1,000,000 $ 10,000 9,831,668 $ 9,832
Cancellation of
Treasury Stock -- -- (700,000) (7,000) (1,016) (1)
Net Loss -- -- -- -- -- --
Other comprehensive income -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2005 10,000 $ 100 300,000 $ 3,000 9,830,652 $ 9,831
======== ========== ============ ============= =========== =============
Net Loss -- $ -- -- $ -- -- $ --
Other comprehensive loss -- -- -- -- -- --
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2006 10,000 $ 100 300,000 $ 3,000 9,830,652 $ 9,831
======== ========== ============ ============= =========== =============
Deficit
Accumulated Accumulated Total
Additional Other During the Stockholders'
Treasury Paid in Subscription Comprehensive Development Equity
Stock Capital Receivable Income (loss) Stage (Deficit)
-------- ---------- ------------ ------------- ----------- -------------
Balance carried forward
- September 30, 2004 $ (8,767) $6,435,926 $ -- $ (40,899) $(7,153,064) $ (746,872)
Cancellation of
Treasury Stock 8,767 (1,766) -- -- -- --
Net Loss -- -- -- -- (157,621) (157,621)
Other comprehensive income -- -- -- 14,714 -- 14,714
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2005 $ -- $6,434,160 $ -- $ (26,185) $(7,310,685) $ (889,779)
======== ========== ============ ============= =========== =============
Net Loss $ -- $ -- $ -- $ -- $ (143,476) $ (143,476)
Other comprehensive loss -- -- -- (32,082) -- (32,082)
-------- ---------- ------------ ------------- ----------- -------------
Balance - September 30, 2006 $ -- $6,434,160 $ -- $ (58,267) $(7,454,161) $ (1,065,337)
======== ========== ============ ============= =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-9
HIV-VAC, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended September 30, 2006 and 2005 and for the Period
from January 10, 1997 (Inception) to September 30, 2006
Cumulative
from
January 10,
1997
(Inception) to
September 30,
2006 2005 2006
Cash Flows from Operating Activities
Net loss $ (143,476) $ (157,621) $ (7,444,161)
Adjustments to reconcile net loss to net
cash used in operating activities
Amortization and depreciation 16,250 16,379 158,401
Officers' compensation capitalized -- -- 100,000
Other expenses relating to Noveaux and
Lifeplan acquisition -- -- 261,163
Issuance of stock for licensing fees -- -- 2,135,500
Issuance of stock to directors and
officers' compensation -- -- 110,100
Issuance of option for note payable, current -- -- 140,000
Issuance of stock for services -- -- 2,439,300
Decrease in notes payable -- -- (140,000)
Decrease (increase) in prepaid expenses 2,440 (1,845) (21,510)
Increase in accounts payable 89,604 87,463 439,827
Increase in accrued liabilities 34,000 33,971 114,971
----------- ----------- -------------
Net Cash Used in Operating Activities (1,182) (21,653) (1,706,409)
----------- ----------- -------------
Cash Flows from Investing Activities
Purchase of license rights -- -- (85,000)
Purchase of furniture and equipment -- -- (48,416)
Cash acquired in acquisition -- -- 120,272
----------- ----------- -------------
Net Cash Used in Investing Activities -- -- (13,144)
----------- ----------- -------------
Cash Flows from Financing Activities
Proceeds from issue of preferred stock series B -- -- 10,000
Proceeds from issuance of common stock -- -- 689,164
Purchase of treasury stock -- -- (11,767)
Proceeds from notes payable -- -- 140,000
Proceeds from sale of treasury stock and warrants -- -- 15,000
Proceeds from advances from related parties 1,200 19,950 536,244
Payment of stockholder's loan -- -- (272)
Proceeds from additional paid in capital -- -- 342,108
----------- ----------- -------------
Net Cash Provided by Financing Activities 1,200 19,950 1,720,477
----------- ----------- -------------
Net Increase (Decrease) in Cash 18 (1,703) 924
Cash - Beginning of Year 906 2,609 --
----------- ----------- -------------
Cash - End of Year $ 924 $ 906 $ 924
=========== =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-10
HIV-VAC, INC.
(A Development Stage Company)
Statements of Cash Flows
Years Ended September 30, 2006 and 2005 and for the Period
from January 10, 1997 (Inception) to September 30, 2006
Cumulative
from
January 10,
1997
(Inception) to
September 30,
2006 2005 2006
Supplemental Disclosure of Cash Flow
Information
Non Cash Transactions:
Issuance of common shares for Noveaux merger $ -- $ -- $ 106,525
=========== =========== =============
Issuance of common shares for Lifeplan merger $ -- $ -- $ 50,000
=========== =========== =============
Preferred B stock dividend $ -- $ -- $ 10,000
=========== =========== =============
Forgiveness of stockholder debt $ -- $ -- $ 7,227
=========== =========== =============
Cancellation of Treasury Stock $ -- $ (8,767) $ (8,767)
=========== =========== =============
(The accompanying notes are an integral part of these financial statements.)
F-11
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
1. Operations
HIV-VAC, Inc. (the "Company"), formerly known as Personna Records, Inc.,
was incorporated on January 10, 1997 in the State of Nevada. Personna
Records formerly known as Sonic Records, Inc. was engaged in the
production and distribution of musical records. In April 1998, Personna
became the surviving corporation after a merger with Nouveaux Corporation.
In March 2000, HIV-VAC, Inc. became the surviving corporation after a
merger with Life Plan.
The Company is currently engaged in the research and development of a
vaccine to combat the Human Immunodeficiency Virus ("HIV"). The Company
will operate under the exclusive worldwide license of Intracell Vaccines
Limited ("Intracell"), in the development and distribution of the vaccine.
The Company's headquarters are located in Ontario, Canada and the research
facility is located in Birmingham, United Kingdom.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company's financial statements have been prepared following generally
accepted accounting principles in the United States ("U.S. GAAP"), which
are expressed in United States funds.
a) Use of Estimates
The preparation of the Company's financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the
financial statements, and the reported amounts of revenues and
expenses during the reporting periods. These estimates are based on
management's best knowledge of current events and actions the
Company may undertake in the future. Significant areas requiring the
use of estimates relate to the estimated useful lives of furniture
and equipment and the valuation and useful life of the intangible
asset. Actual results could differ from these estimates. These
estimates are reviewed periodically and as adjustments become
necessary, they are reported in earnings in the period which they
become available.
F-12
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
2. Summary of Significant Accounting Policies (cont'd)
b) Furniture and Equipment
Furniture and equipment are stated at cost. Major renewals and
betterments are capitalized while maintenance and repairs, which do
not extend the lives of the respective assets, are expensed when
incurred. Depreciation is computed over the estimated useful lives
of the assets.
Useful lives for furniture and equipment are as follows:
Office equipment 15% Declining balance
Furniture 10% Declining balance
The cost and accumulated depreciation for furniture and equipment
sold, retired, or otherwise disposed of are relieved from the
accounts, and any resulting gains or losses are reflected in income.
c) Intangible Asset
Intangible asset consists of a licensing right.
The licensing right is being amortized over the remaining estimated
useful life of 12 years commencing April 1999 using the straight
line method.
d) Long-lived Assets
The Company reviews its long lived assets for impairment whenever
events or circumstances indicate that the related carrying amount of
the assets may not be recoverable. An impairment loss would be
recognized when estimated future cash flows expected to result from
the use of the asset and its eventual disposition are less than its
carrying amount.
e) Financial Instruments
All the Company's financial instruments are initially recorded at
their fair value. The Company classifies all financial instruments
as held-for-trading or other financial liabilities. Financial
liabilities are measured at amortized cost. Instruments classified
as held for trading are measured at fair value.
The Company has designated its cash as held for trading. Accounts
payable, accrued liabilities, and advances from related parties are
classified as other liabilities.
F-13
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
2. Summary of Significant Accounting Policies (cont'd)
f) Income Tax
Deferred tax assets and liabilities are recorded for differences
between the financial statement and tax basis of the asset and
liabilities that will result in taxable deductible amounts in the
future based on enacted tax laws and rates applicable to the periods
in which the differences are to be realized. Income tax expense is
recorded for the amount of income tax payable or refundable for the
period increased or decreased by the change in deferred tax assets
and liabilities during the period.
g) Translation of Foreign Currency
The activity of the Company's foreign offices are translated in
accordance with ASC Topic 830, "Foreign Currency Matters", which
requires that foreign currency assets and liabilities be translated
using the exchange rates in effect at the balance sheet date.
Revenues and expenses are translated using the average exchange
rates prevailing throughout the year. Unrealized gains and losses
from foreign currency translations are included in other
comprehensive income for the period.
h) Loss Per Share
Basic loss per share, which does not include any dilutive
securities, is computed by dividing the loss available to common
stockholders by the weighted average number of common shares
outstanding during the period. In contrast, diluted loss per share
considers the potential dilution that could occur from other
financial instruments that would increase the total number of
outstanding shares of common stock. Potentially dilutive securities,
however, have not been included in the diluted loss per share
computation because their effect is anti-dilutive.
i) Comprehensive loss
The Company accounts for comprehensive loss in accordance with ASC
Topic 220, "Comprehensive Income", which establishes standards for
reporting and presentation of comprehensive loss and its components.
Comprehensive loss is presented in the statements of shareholders'
equity (deficit), and consists of net loss and foreign currency
translation adjustment.
j) Stock Based Compensation
The Company enters into transactions in which goods or services are
the consideration received for the issuance of equity instruments.
The value of these transactions are measured and accounted for,
based on the fair value of the equity instrument issued or the value
of the goods or services received, whichever is more reliably
measurable. The services are expensed in the periods that the
services are rendered.
F-14
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
2. Summary of Significant Accounting Policies (cont'd)
k) Segment Reporting
ASC Topic 280 "Segment Reporting" establishes standards for the
manner in which public enterprises report segment information about
operating segments. The Company has determined that its operations
primarily involve one reportable segment.
l) Recent Accounting Pronouncements
Many recent accounting pronouncements have been issued since 2004.
The Company has determined that the applicable accounting
pronouncements will not have a material affect on the financial
statements.
3. Furniture and Equipment, Net
2006 2005
Accumulated Accumulated
Cost Depreciation Cost Amortization
--------- ------------ --------- ------------
Furniture and equipment $ 48,416 $ 42,779 $ 48,416 $ 41,945
--------- ------------ --------- ------------
Net carrying amount $ 5,637 $ 6,471
------------ ------------
Depreciation expenses for the years ended September 30, 2006 and 2005 were
$834 and $963, respectively.
4. Intangible Asset, Net
2006 2005
Accumulated Accumulated
Cost Depreciation Cost Amortization
--------- ------------ --------- ------------
License $ 185,000 $ 115,621 $ 185,000 $ 100,205
--------- ------------ --------- ------------
Net carrying amount $ 69,379 $ 84,795
------------ ------------
The License Agreement was terminated effective December 01, 2007. See Note
12 (a).
F-15
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
5. Advances From Related Parties
2006 2005
Intracell $ 457,406 $ 457,406
Directors and officers of the Company 78,838 77,638
------------ ------------
$ 536,244 $ 535,044
============ ============
Intracell is a related party to the Company by virtue of the Company's
controlling shareholders owning Intracell.
These advances are non-interest bearing, unsecured and have no specified
terms for repayment.
6. Stockholders' Equity (Deficit)
Common and preferred stock were issued as follows:
a) Sale of common stock - In April 1998, the Company issued 1,016
shares of common stock to the Company's founders for cash of $508.
b) In April 1998, the Company issued 781 shares of common stock to
acquire 100 percent of the issued and outstanding shares of Nouveaux
Corporation.
c) During the year ended September 30, 1998, stockholders contributed
$342,108 in additional paid in capital.
d) On February 10, 1999, the Company issued 200,103 shares of common
stock for an aggregate amount of $100,000 under the Securities Act
of 1993, as amended Under Regulation D, Rule 504.
e) On February 23, 1999, the Company declared a 1:50 reverse split of
the Company's common stock, effective March 8, 1999.
f) On March 15, 1999, the Company issued 92,463 shares of common stock
for a subscription receivable with an aggregate amount of $140,000
under the Securities Act of 1993, as amended Under Regulation D,
Rule 504. The Company accepted a note receivable in lieu of payment.
The note was paid in 2000.
g) On April 6, 1999, the Company issued 57,529 shares of common stock
and 10,000 shares of preferred stock, Series A, for an aggregate
amount of $99,900 and $100 respectively, in exchange for the
exclusive right to the worldwide license for the development and
distribution of a HIV vaccine to combat aids. Each share of
preferred stock has 3,000 votes per common share at any meeting of
the stockholders where votes are submitted.
h) On April 6, 1999, the Company purchased treasury stock for $1,767.
F-16
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
6. Stockholders' Equity (Deficit) (cont'd)
i) On September 27, 1999, 400 shares of common stock were issued for an
aggregate amount of $5,041.
j) On March 8, 2000, the Company issued 1,001 shares of common stock
for the merger of Scientific Life Plan ("Lifeplan")
k) On May 26, 2000, the Company issued 4,548 shares of common stock for
an aggregate amount of $99,990. Concurrently, the Company issued
6,835 shares of common stock with an aggregate value of $150,000 to
Intracell under the terms of the anti-dilution provision of the
Assignment of License Agreement.
l) On June 29, 2000 the Company issued 733 shares of common stock for
an aggregate amount of $23,655. Concurrently, the Company also
issued 1,100 shares of common stock with an aggregate value of
$35,500 to Intracell under the terms of the anti-dilution provision
of the Assignment of License Agreement.
m) On June 29, 2000, the Company issued 30,000 shares of common stock
for an aggregate amount of $675,000 in legal services.
n) On July 5, 2000 the Company issued 4,600 shares of common stock for
an aggregate amount of $99,990. Concurrently, the Company issued
6,896 shares of common stock with an aggregate value of $150,000 to
Intracell under the terms of the anti-dilution provision of the
Assignment of License Agreement.
o) On July 24, 2000, The Company issued 30,031 shares of common stock
for an aggregate amount $675,000 in legal services.
p) On July 27, 2000 the Company issued 4,600 shares of common stock for
an aggregate amount of $99,990. Concurrently, the Company issued
6,896 shares of common stock with an aggregate value of $150,000 to
Intracell under the terms of the anti-dilution provision of the
Assignment of License Agreement.
q) On August 21, 2000, the Company issued 6,352 shares of common stock
for an aggregate amount of $99,990. Concurrently, the Company issued
9,525 shares of common stock with an aggregate value of $150,000 to
Intracell Vaccines Ltd under the terms of the anti-dilution
provision of the Assignment of License Agreement.
r) On May 16, 2001, the Company issued 5,003 shares of common stock for
an aggregate amount of $20,000 for consulting services.
s) On July 6, 2001 the Company declared a 1:100 reverse split of the
Company's common stock, effective March 22, 2001.
F-17
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
6. Stockholders' Equity (Deficit) (cont'd)
t) On August 7, 2001, the Company amended its license agreement with
Intracell. The amendment called for Intracell to waive its right to
terminate the agreement due to the Company's failure to raise
$1,500,000 pursuant to Section 9.1(b) of the agreement dated April
6, 1999 in exchange for the following:
i) 3,000,000 shares of common stock, and
ii) options to acquire 7,500,000 shares of the Company's common
stock.
The 3,000,000 shares were valued at the closing price on August 7,
2001 of $0.50 per share.
u) On August 10, 2001, the Company issued 1,000,000 shares of its
preferred stock, Series B, with attached warrants at par value of
$0.01 per share, or $10,000. The preferred Series B stock converts
to 20 million shares of the Company's common stock at 40 percent of
the market value of the common stock based on a stated value. The
attached warrants convert to 5,000,000 shares of the Company's
common stock at $1.50 per share. In accordance with the Emerging
Issues Task Force ("EITF") 98-5, the Company valued the beneficial
conversion feature at the amount of the proceeds received from the
sale of the stock ($10,000).
v) On January 7, 2002, the Company bought back the 1,000,000 preferred
shares and the attached warrants that had been issued on August 10,
2001 for a total consideration of $10,000. The preferred shares were
added to the treasury stock, while the warrants were cancelled.
w) On March 21, 2002, the Company issued 150,000 shares of common stock
for an aggregate amount of $22,500 for consulting services.
x) On April 15, 2002, the Company issued 200,000 shares of common stock
for an aggregate amount of $32,000 for consulting services.
y) On May 25, 2002, the Company issued 300,000 shares of common stock
for an aggregate amount of $60,000 for services rendered by the
directors and officers of the Company.
z) On July 29, 2002, the Company sold 300,000 preferred B series shares
from treasury for a total consideration of $15,000. The Company also
issued the purchaser of the preferred B series stock, 3,000,000
warrants. Each warrant is convertible into one common share at an
exercise price of $1.50 and expires in December 2003.
aa) On August 3, 2002, the Company issued 100,000 shares of common stock
for cash of $20,000 to an officer of the Company.
ab) On August 7, 2002, the Company issued 2,272,727 shares of common
stock to Intracell, under a settlement of debt agreement valued a
$500,000.
F-18
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
6. Stockholders' Equity (Deficit) (cont'd)
ac) On August 30, 2002, the Company issued 1,323,529 shares of common
stock to Intracell, under a settlement of debt agreement valued a
$225,000.
ad) On October 30, 2002, the Company issued 300,000 shares of common
stock for an aggregate amount of $50,100 for services rendered by
the directors and officers of the Company.
ae) On October 31, 2002, the Company issued 1,150,000 shares of common
stock under debt settlement agreements with a total value of
$195,500.
af) On April 23, 2003, the Company issued 140,000 shares of common stock
for an aggregate amount of $51,800 for legal fees for services
rendered to the Company during the previous 18 months.
ag) On November 3, 2003 the Company issued 425,000 common shares for an
aggregate amount of $42,500 for legal fees and consulting fees.
ah) On September 30, 2005, the Company cancelled 1,016 Common shares and
700,000 Preferred Series "B" shares that were held as treasury
stock.
7. Commitments and Contingencies
a) Stock Options - On August 7, 2001, the Company provided Intracell
with three options to acquire a total of 7,500,000 shares as
follows:
i) 2,500,000 shares of common stock at $0.50 per share when Phase
I human trials begin.
ii) 2,500,000 shares of common stock at $1.00 per share when Phase
III human trials begin.
iii) 2,500,000 shares of common stock at $2.00 per share when the
Company receives a product license for the HIV vaccine from
any recognized government.
The options expire on September 1, 2007. No milestones had been met
as at September 30, 2006.
b) Royalty Payments under Licensing Agreement - The Company has
committed to make minimum royalty payments of (pound)50,000
($93,380) per annum. The minimum payments will remain in effect for
the duration of the utilization of the patents. As of the year end,
the Company had not made the above payments and owes cumulative
royalties of (pound)250,000 or $468,150 (2005 - (pound)200,000 or
$352,560).
F-19
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
8. Income Taxes
2006 2005
Temporary differences $ 14,117 $ 13,842
Loss carryforwards 2,050,177 2,007,917
Allowance for valuation (2,064,294) (2,021,759)
------------ ------------
$ -- $ --
============ ============
Potential benefits of net operating losses have not been recognized in
these financial statements because the Company can not be assured that it
is more likely than not it will utilize the net operating losses carried
forward in future years.
The Company's tax returns have not yet been filed and when they are filed
will be subject to audits and potential penalties and reassessments by
taxation authorities. The outcome of audits can not be reasonably
determined and the potential impact on the financial statements is not
determinable.
9. Related Party Transactions
The following table summarizes the Company's related party transactions,
that occurred in the normal course of operations for the years, which are
measured at the exchange amount agreed to by the related parties:
2006 2005
Amounts Charged by a Shareholder
Consulting fees charged by Intracell
included in research and development costs $ -- $ 15,000
============ ============
Directors and officers compensation $ 32,000 $ 21,500
============ ============
F-20
HIV-VAC, INC. (A Development Stage Company)
Notes to Financial Statements
September 30, 2006 and 2005
10. Financial Instruments
a) Fair Value
The carrying amount of cash, accounts payable, accrued liabilities,
and advances from related parties approximate fair values due to the
short term nature of these items.
b) Currency Risk
While the reporting currency is in the U.S. Dollar, 64% of expenses
for the year ended are denominated in U.K. pound (2005 - 62% of
expenses). As at September 30, 2006, 22% of assets and 44% of
liabilities are originally denominated in U.K. pound (2005 - 21% of
assets and 39% of liabilities). The Company is exposed to foreign
exchange risk as the results of operations may be affected by
fluctuations in the exchange rates between U.S. dollar and U.K.
pound.
11. Stockholders' Restrictions
The stockholders of the Company have a pre-emptive right regarding the
purchase of stock. Furthermore, the transfer of certain stock is
restricted, in accordance with the regulations of the Securities and
Exchange Commission ("SEC"). The regulations prevent the transfer of
stock, unless a registration statement is in effect, or if the stock is
subject to exemption under SEC regulations.
12. Subsequent Events
a) The License Agreement was terminated effective December 1, 2007.
Under the termination agreement, the $566,005 in outstanding royalty
payments were forgiven.
b) On August 23, 2010, the Company entered into an irrevocable
agreement to acquire 80% of the issued and outstanding share capital
of Richard Y Lange, a Mexican corporation, through the issue of
8,000,000 of the Company's common shares valued at $0.25 per common
share. Under the agreement, Richard Y Lange warrants that
shareholders equity in Richard Y Lange will not be less than
70,000,000 pesos ($5,995,000). Richard Y Lange is involved in
construction, property development and product distribution. It also
owns a block plant and a sand pit. The agreement will close as soon
as Richard Y Lange has verified its assets through audit or as
agreed to by the parties. The Company represents, at Closing, there
will be 10,421,916 common shares and 300,000 Preferred "B" shares
outstanding. Thus, the Company has agreed to reduce their common
shares by 8,736 shares.
c) The Company changed its name to Grupo International Inc. on
September 2, 2010.
F-21
Item 9. Changes In And Disagreements With Accountants On Accounting And
Financial Disclosure.
None
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures:
Our chief executive officer and chief financial officer has concluded that the
disclosure controls and procedures were not effective as of September 30, 2006.
These controls are meant to ensure that information required to be disclosed by
the issuer in the reports that it files or submits under the Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms and to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the Act is
accumulated and communicated to the issuer's management, including its principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
The registrant has been delinquent in its SEC filing. Management has only
recently prepared the required reports for filing. Management intends to
implement internal controls to ensure that similar situations do not occur in
the future and that required SEC filings will be timely.
Management's Annual Report on Internal Control over Financial Reporting:
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting
is the process designed by and under the supervision of Kevin Murray, chairman
of the board, who was chief executive officer and chief financial officer, or
the persons performing similar functions, to provide reasonable assurance
regarding the reliability of our financial reporting and the preparation of our
financial statements for external reporting in accordance with accounting
principles generally accepted in the United States of America. Mr. Murray has
evaluated the effectiveness of our internal control over financial reporting
using the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control over Financial Reporting -
Guidance for Smaller Public Companies.
The chief financial officer and chief executive officer has assessed the
effectiveness of our internal control over financial reporting as of September
30, 2006, and concluded that it is not effective for the reasons discussed
above.
This annual report does not include an attestation report of the registrant's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the
registrant's registered public accounting firm pursuant to temporary rules of
the Securities and Exchange Commission that permit the registrant to provide
only management's report in this annual report.
Evaluation of Changes in Internal Control over Financial Reporting:
Our chief executive officer and chief financial officer have evaluated changes
in our internal controls over financial reporting that occurred during the
period ended September 30, 2006. Based on that evaluation, our chief executive
officer and chief financial officer did not identify any change in our internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
Important Considerations:
The effectiveness of our disclosure controls and procedures and our internal
control over financial reporting is subject to various inherent limitations,
including cost limitations, judgments used in decision making, assumptions about
the likelihood of future events, the soundness of our systems, the possibility
of human error, and the risk of fraud. Moreover, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions and the risk that the degree
of compliance with policies or procedures may deteriorate over time. Because of
these limitations, there can be no assurance that any system of disclosure
controls and procedures or internal control over financial reporting will be
successful in preventing all errors or fraud or in making all material
information known in a timely manner to the appropriate levels of management.
Item 9B. Other Information
None
14
PART III
Item 10. Director's And Executive Officers Promoters and Corporate Goverance.
Directors and Executive Officers
Our directors and executive officers at 30 September 2006 were as follows
NAME AGE POSITION
-------- --- ---------
Kevin W Murray 53 Chairman of the Board, President and CEO
Gordon R B Skinner 64 Director, Director of Research
Sally Del Principe 51 Director,
John Palethorpe 61 Vice President
There are no individuals, other than those listed above, who make a significant
contribution to our business.
Kevin W. Murray has served as our Vice President of Finance and Administration,
and as a director, since from April of 1999 to June 2002. He was appointed our
Chairman, President and Chief Executive Officer in June 2002. He has been a
director of Intracell Vaccines Limited since September 1998. He is currently the
CEO and president of Pipe Vision, a private corporation engaged in pipeline
rehabilitation that he founded in 1991. He was a director of Woodie 1, Inc, a
public investment company from April 1998 to September 1998. Mr. Murray holds a
Bachelor of Accounting Science degree from The University of South Africa, and
completed post-graduate studies in accountancy at The University of Cape Town,
prior to gaining admission to the South African Institute of Chartered
Accountants.
Dr. Gordon R.B. Skinner is the developer of our proposed vaccine. He served as
our Chairman and President from April of 1999 to June 2002 and as our Director
of Research since June 2002. He has been a director of Intracell Vaccines
Limited since November of 1998. He is the Managing Director of Vaccine Research
International, PLC, a corporation involved in the development of a
staphylococcal vaccine. He is Chairman of the Vaccine Research Trust UK, and
until recently was an Honorary Consultant in Infection at The University
Hospital Birmingham NHS Trust, Birmingham. Dr. Skinner was a senior lecturer at
the Department of Medical Microbiology at The University of Birmingham from 1976
to 1998. He received an MB ChB from the University of Glasgow in 1965, an MD
(First Class Honors) from The University of Birmingham in 1975, and a DSc from
The University of Birmingham in 1989. He is a Fellow of The Royal College of
Obstetrics and Gynecologists, and a Fellow of The Royal College of Pathologists.
Dr. Skinner developed the Skinner Herpes vaccine, and is the author of more than
100 scientific and medical publications.
Sally Del Principe has served as a director of the company since June 2001. She
is a resident of United Kingdom and since 1992 has been a partner in Lupton Del
Principe Associates, a private company which specializes in credit insurance
brokerage. Mrs. Del Principe has spent a considerable portion of her working
life in Southern Africa. Ms Del Principe resigned in 2010.
John Palethorpe has served as a Vice President since April of 1999. Since 1979,
Mr. Palethorpe has been the Chairman and Managing Director of Stourbridge
Forklift Co. Ltd., a company that acts as an agent for the sale of Desta and
Hyundai Forklifts. He is also the Chairman and managing director of the
following companies: Randcrown Ltd., a property and investment company
incorporated in 1979; J.Rigg Construction Ltd a property maintenance and repair
company incorporated in 1979; and Tionmartin Ltd., a company that sells used
forklifts and has been incorporated since 1975 and Vaccine Research
International Plc, a corporation involved in the development of a Staphyloccocal
vaccine. He has been involved in the financing of the development of our
proposed vaccine since 1993. Mr palethorpe resigned in 2010.
There are no familial relationships between any of the Company's
executive officers and directors.
Conflicts of Interest
Our management has other financial and business interests to which a
significant amount of time is devoted which may pose conflicts of interest with
regard to allocation of their time and efforts. Kevin Murray, our president,
director and CEO, and Dr. Gordon Skinner, our director of research are also
officers and directors and each holders of 33% of the outstanding common stock
of Intracell Vaccines Limited, a company incorporated on the Isle of Mann and
holder of 67.97% of our common stock and 100% of our Series A preferred stock.
In addition, John Palethorpe, our vice president is also a holder of 33% of the
outstanding common stock of Intracell Vaccines Limited. Our management,
together, both directly and indirectly, hold 75.62% of our common stock and 100%
of our Series "A" preferred shares. There can be no assurance that management
will resolve all conflicts of interest in favor of HIV-VAC. Failure of
management to conduct HIV-VAC's business in its best interest may result in
liability of the management to HIV-VAC.
15
Section 16(a) Beneficial Ownership Reporting Compliance .
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's
outstanding common stock, to file with the SEC, initial reports of beneficial
ownership and reports of changes in beneficial ownership of the Company's common
stock and other equity instruments of the Company. To the Company's knowledge,
the Company's directors and officers have not complied with the requirement.
CODE OF ETHICS
The company has adopted a Code of Ethics applicable to its Chief Executive
Officer and Chief Financial Officer. This Code of Ethics is filed herewith as an
exhibit.
Item 11. Executive Compensation.
As of the fiscal year ended September 30, 2006, our executive officers
have received or accrued compensation from us as follows:
Annual Compensation Long Term Compensation
------------------- ----------------------
Stock Awards
Fiscal and Other
Name and Position Year Salary Bonus Compensation
Kevin Murray 2004 $ 10,000 $ - $ -
Chairman and CEO 2005 $ 10,750 $ - $ -
2006 $ 16,000 $ - $ -
Dr. Gordon Skinner 2004 $ 10,000 $ - $ -
Director, Director of 2005 $ 10,750 $ - $ -
Research 2006 $ 16,000 $ - $ -
Sally Del Principe 2004 $ - $ - $ -
Director and CFO 2005 $ - $ - $ -
2006 $ - $ - $ -
John Palethorpe 2004 $ - $ - $ -
Vice President 2005 $ - $ - $ -
2006 $ - $ - $ -
--------------------------------------
No cash fees or other consideration has been paid to our directors
through the date hereof.
There are no employment contracts in effect with any of our officers or
directors, nor are there any agreements or understandings with such persons
regarding termination of employment or change-in-control arrangements.
As noted above under the caption License Agreement and Consulting
Agreement on page 7, we had a consulting agreement with Intracell Vaccines
Limited. Messrs. Skinner, Murray and Palethorpe are shareholders of Intracell
Vaccines, and Messrs. Skinner and Murray also serve as Intracell Vaccines
directors.
Our executives, Messrs. Skinner, Murray and Palethorpe have not
received any compensation from Intracell Vaccines Limited for the years 2004,
2005 and 2006.
16
Item 12. Security Ownership Of Certain Beneficial Owners And Management and
Related Stockholder Matters.
The following chart sets forth certain information with respect to the
beneficial ownership of the common stock and the Series A preferred stock of the
Company as of September 30, 2006: (i) each person who is known by the Company to
beneficially own more than 5 percent of the Company's common stock, (ii) each of
the Company's directors, (iii) each of the Company's Named Executive Officers
(defined below), and (iv) all directors and executive officers as a group. As of
September 30, 2006, the Company had 9,830,652 shares of common stock
outstanding, 10,000 Series A preferred shares outstanding and 1,000,000 Series B
preferred shares outstanding.
Percentage
Name and Address Title of Class # of shares of Class
---------------- -------------- ----------- ----------
Kevin W. Murray Common Stock 2,445,098(1) 24.86%
12 Harben Court
Collingwood, Ontario Canada Series A Preferred Stock 3,333(2) 33.33%
L9Y 4L8
Gordon Skinner Common Stock 2,445,098(1) 24.86%
Harborough Banks
Old Lapworth Rd Series A Preferred Stock 3,333(2) 33.33%
Solihill B94 6Ld
United Kingdom
John Palethorpe Common Stock 2,445,098(1) 24.86%
Knoll Hill
Belbroughton Road Series A Preferred Stock 3,333(2) 33.33%
Blakedown, Kidderminster
9YLD 3LN
United Kingdom
Sally Del Principe Common Stock 100,000 1.02%
Sunny Bank House
32 Moorhall Lane
Stourport on Severn
Worcestershire
DY13 8RB
United Kingdom
Directors and Officers Common Stock 7,435,294(1) 75.62%
as a Group Series A Preferred Stock 10,000(2) 100%
Tradebay Investments Ltd. Common Stock 3,000,000(2) 30.51%
-------------------------------------------
(1) Director and officer of the Company
(2) Consists of 3,000,000 common shares issuable upon the conversion of Series B
preferred stock held by Tradebay Investments. Rosemary Hunter was the sole
Officer and Director of Tradebay Investments Ltd.
Securities Authorized for Issuance Under Equity Compensation Plans
As of the end of the fiscal year, the Company does not have any equity
securities outstanding or authorized for issuance pursuant to any equity
compensation plans.
Item 13. Certain Relationships And Related Transactions and Director
Independence.
As further noted above in more detail under the caption License
Agreement and Consulting Agreement, we acquired the rights to our proposed
vaccine from Intracell Vaccines Limited for consideration consisting of common
and preferred securities. Messrs. Skinner, Murray and Palethorpe are
shareholders of Intracell Vaccines, and Messrs. Skinner and Murray also serve as
Intracell Vaccines directors. Messers Murray, Skinner and Palethorpe acquired
all of Intracell's shareholdings in equal proportions on 28 February 2006.
On August 3, 2002, we sold 100,000 shares of our common stock to John
Palethorpe at $0.20 per share in reliance upon the exemption provided by Section
4(2) and Regulation D, Rule 506.
17
On August 7, 2002, the Company issued 2,272,727 shares of common stock
to Intracell Vaccines Limited under a settlement of debt agreement valued at
$500,000 in reliance upon the exemption provided by Section 4(2) and Regulation
D, Rule 506.
On August 30, 2002, the Company issued 1,323,529 shares of common stock
to Intracell Vaccines Limited under a settlement of debt agreement valued at
$500,000 in reliance upon the exemption provided by Section 4(2) and Regulation
D, Rule 506.
On October 30, 2002 the Company issued 300,000 shares of Common stock
for an aggregate amount of $50,100 for services rendered by the directors of the
Company.
Director Independence. The Company's board of directors at September 30, 2006,
consists of Kevin W. Murray, Gordon Skinner and Sally del Principe. Mr. Murray
and Dr Skinner are not independent as such term is defined by a national
securities exchange or an inter-dealer quotation system. During the year ended
September 30, 2006, there were no transactions with related persons other than
as described in the section above entitled "Item 11. Executive Compensation".
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fees. We paid aggregate fees and expenses of approximately $4,000 and
$2,000, respectively, during 2005 and 2006, respectively, for work completed for
our annual audits.
Tax Fees. We did not incur any aggregate tax fees and expenses from S F
Partnership LLP for the years September 30, 2005 and 2006, respectively, for
professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees. We did not incur any other fees from S F Partnership LLP during
2005 and 2006.
The board of directors, acting as the Audit Committee considered whether, and
determined that, the auditor's provision of non-audit services was compatible
with maintaining the auditor's independence. All of the services described above
for the years ended September 30, 2005 and 2006 were approved by the board of
directors pursuant to its policies and procedures.
Item 15. Exhibits, Financial Statement Schedules
Exhibit
Number Description
3.1 Articles of Incorporation, filed as Exhibit to the Form 10-QSB
filed May 16, 2000.
3.2 Amended Articles of Incorporation, filed as Exhibit to the Form
10-QSB filed August 14, 2001.
3.3 By-laws, filed as Exhibit to Form 10-QSB filed May 16, 2000.
3.4 Certificate of Amendment to Certificate of Incorporation, dated as
of May 15, 2001, filed as Exhibit to the Form 10-QSB filed August
14, 2001.
10.1 License agreement between University of Birmingham and Intracell
Vaccines Ltd dated November 5, 1998, filed as and Exhibit to the
Amended Form 10-KSB filed Oct 22, 2002.
10.2 License Agreement between HIV-VAC, Inc. and Intracell Vaccines
Ltd., filed as an Exhibit to the Registration Statement on Form
SB-2 filed August 22, 2001.
10.3 Consulting Agreement between HIV-VAC, Inc. and Intracell Vaccines
Ltd., filed as and Exhibit to the Form 10-KSB filed on January 13,
2003.
18
10.4 Extension of Consulting Agreement between HIV-VAC, Inc. and
Intracell Vaccines Ltd. dated May 26, 2003, filed January 13, 2003
10.5 Debt Settlement Agreement between HIV-VAC, Inc. and Sheldon Cohen
filed as Exhibit to Form S-8 POS filed Oct 31, 2002.
10.6 Debt Settlement Agreement between HIV-VAC, Inc. and Irwin
Rapoport, filed as Exhibit to Form S-8 POS filed Oct 31, 2002.
10.7 Debt Settlement Agreement between HIV-VAC, Inc. and Lina Fedko,
filed as Exhibit to Form S-8 POS filed Oct 31, 2002.
10.8 Debt Settlement Agreement between HIV-VAC, Inc. and Cliff Bodden,
filed as Exhibit to Form S-8 POS filed Oct 31, 2002.
10.9 Stock Option Agreement between HIV-VAC, Inc. and Trinity Funding,
Inc., dated September 2, 2002 filed January 13, 2003.
31.1 Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(a) Reports on Form 8-K:
During the period covered by this report, we did not file any current
reports on Form 8-K.
Item 14. Controls and Procedures.
(a) Disclosure controls and procedures. Within 90 days before filing this
report, the Company evaluated the effectiveness of the design and operation of
its disclosure controls and procedures. The Company's disclosure controls and
procedures are the controls and other procedures that it designed to ensure that
it records, processes, summarizes and reports in a timely manner the information
it must disclose in reports that it files with or submits to the Securities and
Exchange Commission. Kevin W. Murray, the Company's Chief Executive Officer,
President and CFO, supervised and participated in this evaluation. Based on this
evaluation, Kevin W. Murray concluded that, as of the date of their evaluation,
the Company's disclosure controls and procedures were effective.
(b) Internal controls. Since the date of the evaluation described above, there
have not been any significant changes in the Company's internal accounting
controls or in other factors that could significantly affect those controls.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HIV-VAC, Inc.
By: /s/ KEVIN MURRAY
---------------------------------------------------
Chairman of the Board, President & CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
By: /s/ KEVIN W MURRAY Chairman of the Board September 30, 2011
---------------------- President & CEO & CFO
Kevin Murray
20
HIV-VAC, INC.
FINANCIAL CODE OF ETHICS
As a public company, it is of critical importance that HIV-VAC, Inc. ("HIV-VAC")
filings with the Securities and Exchange Commission be accurate and timely.
Depending on their position with HIV-VAC, employees may be called upon to
provide information to assure that HIV-VAC's public reports are complete, fair,
and understandable. HIV-VAC expects all of its employees to take this
responsibility seriously and to provide prompt and accurate answers to inquiries
related to HIV-VAC's public disclosure requirements.
HIV-VAC's Finance Department bears a special responsibility for promoting
integrity throughout HIV-VAC, with responsibilities to stakeholders both inside
and outside of HIV-VAC. The Chief Executive Officer (CEO), Chief Financial
Officer (CFO), and Finance Department personnel have a special role both to
adhere to the principles of integrity and also to ensure that a culture exists
throughout HIV-VAC as a whole that ensures the fair and timely reporting of
HIV-VAC's financial results and conditions. Because of this special role, the
CEO, CFO, and all members of HIV-VAC's Finance Department are bound by HIV-VAC's
Financial Code of Ethics, and by accepting the Financial Code of Ethics, each
agrees that they will:
- Act with honesty and integrity, avoiding actual or actual conflicts of
interest in personal and professional relationships.
- Provide information that is accurate, complete, objective, relevant, timely
and understandable to ensure full, fair, accurate, timely, and understandable
disclosure in the reports and documents that HIV-VAC files with, or submits to,
government agencies and in other public communications.
- Comply with the rules and regulations of federal, state and local governments,
and other appropriate private and public regulatory agencies.
- Act in good faith, responsibly, with due care, competence and diligence,
without misrepresenting material facts or allowing one's independent judgment to
be subordinated.
- Respect the confidentiality of information acquired in the course of one's
work, except when authorized or otherwise legally obligated to disclose.
Confidential information acquired in the course of one's work will not be used
for personal advantage.
- Share job knowledge and maintain skills important and relevant to stakeholders
needs.
- Proactively promote and be an example of ethical behavior as a responsible
partner among peers, in the work environment and in the community.
- Achieve responsible use of, and control over, all HIV-VAC assets and resources
employed by, or entrusted to yourself, and your department.
- Receive the full and active support and cooperation of HIV-VAC's Officers, Sr.
Staff, and all employees in the adherence to this Financial Code of Ethics.
- Promptly report to the CEO or CFO any conduct believed to be in violation of
law or business ethics or in violation of any provision of this Code of Ethics,
including any transaction or relationship that reasonably could be expected to
give rise to such a conflict. Further, to promptly report to the Chair of
HIV-VAC's Audit Committee such conduct if by the CEO or CFO or if they fail to
correct such conduct by others in a reasonable period of time.
21

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